Is a note payable a liability?
Stuck on the journal entry for this. We bought equipment for $50,000, paying 20% down and signing a note for the balance. What would my journal entry look like for this?
Update:Also, I received supplies amounting to 5,000. How would I make a journal entry for that? So my supplies would be 5000 debit but what would i do to balance it out? (assets=liabilities + O.E)
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Yes.
Debit Equipment $50,000
Credit Cash $10,000
Credit Notes Payable $40,000
The equipment would be listed as an asset $50,000. Cash would be debited for $10,000 and the $40,000 remaining balance due would be listed as a debit under Notes payable The note is a liability. and if due within one year would be a current liability. If the note is for more then one year you need to spilt the entry between current liabilities / notes payable (what's due within 12 months) and long term liabilities / notes payable. (Whats due after 12 months)
Regarding the 2nd question. You need to debit cash for the $5,000 and credit inventory for $5,000.
debit
Equipment 50000
credit
cash 10000
Note payable 40000
debit
Supplies 5000
credit
cash 5000